How Much of Your Savings Should Be in FDs?
This is the question we are asked most often. It is also the one we most often refuse to answer directly.
Not because the answer is secret. Because the question, as asked, cannot be answered well.
Someone wants a number. Thirty percent. Half.
A rule they can apply on a Sunday evening and then stop worrying about.
The trouble is that two people with identical savings can have correct answers that are nowhere near each other. One is a Dubai salaried professional on an employment visa. The other is a Bengaluru business owner with rental income and a working spouse.
Same rupees. Completely different right answer.
At Belong, we would rather give you the framework that produces your number than a number that fits nobody. This guide does that.
Why the percentage question misleads
A percentage is an output, not an input.
It falls out of decisions you make about horizon, tax, currency and income stability. Choose the percentage first and you are working backwards from an answer you invented.
There is a second problem. Most people asking this question have not defined what counts as savings.
Does the emergency fund count? The house deposit being assembled? Provident fund balances?
Depending on where you draw that line, the same portfolio can look conservative or reckless.
👉 Tip: Before calculating any allocation, write down what you are counting. Half the confusion in this question is definitional.
The right question
Instead of asking what share should sit in deposits, ask what job each pot of money is doing.
Money has a horizon. That horizon determines the instrument, and the instrument determines the allocation.
Work through your savings and sort every rupee into one of three horizons.
Needed within three years.
School fees, a planned move, a car, the emergency fund. This money should not carry market risk. Deposits are close to ideal.
Needed in three to seven years.
A house deposit, a business plan, a sabbatical. Mixed territory, where deposits share space with lower volatility investments.
Needed beyond seven years.
Retirement, children's higher education, long term wealth. Here deposits work against you, because the erosion of purchasing power compounds.
Add up the first bucket. That total, expressed as a share of your savings, is your minimum FD allocation.
Most people are surprised by this number in one of two directions.
Either the near term bucket is far larger than assumed. A forgotten fee cycle or insurance renewal usually explains it.
Or it is far smaller, and they have been holding years of spending in deposits out of habit.
The rest of the conversation is about how far above that minimum you should sit.
What Indians actually do
Worth knowing, because it explains the anchoring most of us carry.
The Reserve Bank of India publishes annual statistics on deposits with scheduled commercial banks. Its latest returns show term deposits making up well over half of all bank deposits. The household sector is the largest single contributor.
The maturity concentration is the striking part. The large majority of term deposits sit in the one to three year bucket. Very little sits at longer tenures.
Separately, RBI data on household financial assets shows equity and investment funds at under a quarter of the total. That share has grown steadily over recent years. It still leaves deposits dominant.
So the average Indian household is heavily weighted to deposits, and specifically to short deposits that get rolled over repeatedly.
That is the baseline you inherited. It is not a plan. It is a habit.
The reinvestment risk nobody counts
Here is what that maturity concentration actually means, and it rarely appears in articles on this topic.
Say your deposits sit in short tenures and you roll them at every maturity. You are not holding a fixed rate. You are holding a floating rate with extra steps.
Every renewal re-prices your entire deposit book at whatever rate prevails that week. You have no protection if rates fall.
That is reinvestment risk, and it is a real exposure hiding inside the safest looking part of your portfolio. Our guide on FD maturity planning covers the decision at each rollover. NRE FD renewal mistakes covers what goes wrong.
The fix is not to abandon short deposits. It is to stop pretending the allocation is risk free and to spread maturities deliberately.
👉 Tip: A large deposit allocation concentrated at one tenure is a rate bet. You may not have meant to place one.
The four variables that set your number
Income stability.
The less predictable your income, the larger your deposit allocation should be. Commission earners, founders and contract workers need a bigger cushion than tenured salaried staff.
Visa dependence.
This one is specific to NRIs and it matters enormously. If losing your job also means losing your right to remain, your near term needs include relocation costs. That pushes the deposit share up.
Tax status.
A tax exempt NRE deposit and a fully taxed resident deposit at the top slab are not the same instrument. The same allocation produces very different outcomes. Our guide on FD taxation for NRIs sets out the differences.
Horizon to the money.
Already covered above, and it remains the single largest determinant.
There is a fifth variable people rarely name. Your other safety nets.
Employer medical cover, a spouse's stable income or a paid off home all reduce the cash you need standing by. Someone with none of those needs a visibly larger deposit allocation than someone with all three.
Notice that age is absent from that list. The familiar rule that subtracts your age from a hundred is a crude proxy for horizon. It is not a substitute for it.
Take a 55 year old with a fully funded pension. Their effective horizon is longer than that of a 35 year old buying property next year.
The tax variable changes the answer materially
This deserves its own section, because it is where NRI and resident answers diverge most.
An NRE or FCNR deposit is exempt from Indian income tax while you remain non-resident. Nothing is deducted before the money compounds.
That makes a deposit heavy allocation far more defensible for an NRI than for a resident in the highest slab. The same instrument delivers a materially better outcome.
For a top bracket resident, the tax drag argues for keeping the deposit allocation closer to the true minimum. Hold what the three year bucket requires, and route longer money elsewhere.
Read that as direction, not prescription. Your bucket exercise sets the floor. This table tells you which way to lean above it.
What sits in the rest
If deposits take the near term money, something has to take the long term money.
That is the trade you are making. A deposit gives certainty and gives up growth. An equity linked investment does the reverse.
Our comparison of mutual funds versus fixed deposits covers the trade directly. For those considering the shift, moving from fixed deposits to GIFT City mutual funds covers the mechanics.
For the wider structure, see our guide to asset allocation for NRIs and our note on diversification versus concentration.
If you are mapping global options, these are worth browsing:
The broader GIFT City mutual funds tool and the mutual funds product are the starting points.
Diversifying inside the deposit allocation
A point most allocation articles miss entirely. Your FD bucket needs internal diversification too.
Three dimensions matter.
Across banks.
Deposit insurance applies per depositor per bank, aggregated across branches. A large allocation at one bank is insured once, not repeatedly.
Across tenures.
Laddering spreads reinvestment risk and gives you regular access without breaking anything.
Across deposit types.
For NRIs, the choice between rupee and foreign currency deposits is a currency decision inside the safe bucket. Our comparison of NRE versus FCNR fixed deposits works through it.
One warning on chasing yield inside this bucket. Corporate deposits often advertise higher rates than banks, and they carry credit risk that bank deposits do not. Our note on corporate FDs versus bank FDs explains the difference.
If you are reaching for extra yield inside your safety allocation, you have misunderstood what the allocation is for.
If you are an NRI
Start with the visa question, because it dominates everything else.
Employment visa holders should treat relocation as a near term liability. That belongs in the first bucket, which raises your deposit share.
Then split by geography. Deposits in India serve Indian obligations. They do not serve a rent payment in Dubai next month.
The tax exemption on NRE and FCNR interest is a genuine advantage. It justifies a higher deposit weight than a comparable resident would carry.
To compare current rates rather than remembered ones, use our NRI FD rates explorer.
If you are a resident Indian
Your currency and location match, which removes the hardest constraint NRIs face.
Your binding constraint is tax. At higher slabs, every rupee of deposit interest is taxed at your marginal rate before inflation touches it.
That argues for holding the deposit bucket tight to what your three year horizon actually needs. Beyond that, the concentration works against you.
There is a second point specific to residents. If your entire savings base sits in rupee assets, you hold one currency and one economy. GIFT City offers a route to dollar exposure without an overseas account.
When to change the number
Your allocation should not be static, but it also should not move with market noise.
Review it when something structural changes. A job change, a visa change, a new dependent, a house purchase moving from someday to next year.
Review it when you cross a residency threshold, since your tax treatment shifts with it.
Do not review it because deposit rates moved, or because equity markets had a bad quarter. Those are not reasons to restructure your net worth.
Mistakes we see
Choosing a percentage before defining the horizon.
The number then has no logic behind it and cannot be defended when circumstances change.
Treating the deposit allocation as risk free.
It carries inflation risk, reinvestment risk and concentration risk.
Holding the whole allocation at one bank.
Insurance cover does not scale with the amount.
Chasing higher rates inside the safe bucket.
Credit risk added to money that exists to be certain.
Never revisiting after a residency change.
A returning NRI's tax treatment changes, and the old allocation logic no longer holds.
What happens if you ignore this
Nothing dramatic, which is the problem.
The allocation simply persists. It was set when you were younger, in a different country, with a different job and no children. It renews itself every year without a decision being made.
Ten years later you discover your safe money was too large. The time value of money worked against you the whole way.
Or the opposite. The allocation was too small, an emergency arrived, and you sold long term investments at the worst possible moment.
Both failures come from the same root. Nobody set the number deliberately.
Decision clarity
If you have not done the bucket exercise, do that first. Everything else is guesswork without it.
If your near term needs are already covered and your horizon is long, hold the deposit allocation near the floor.
If your income is unstable or visa dependent, sit above the floor. The lower return is the price of stability.
If you are a top slab resident holding a large deposit book, the tax drag is your binding problem. Look at where the long horizon money should sit instead.
If your deposits are all at one bank and one tenure, fix that before you touch the overall percentage. It is the easier and larger improvement.
Frequently asked questions
Is there a standard percentage of savings that should be in FDs?
No. A defensible allocation starts by summing what you need within three years. Adjust that for income stability, visa status and tax treatment.
Does the hundred minus age rule work for deposits?
It is a rough proxy for horizon and nothing more. Two people the same age with different job security and different goals should hold very different allocations.
Should NRIs hold a higher FD allocation than residents?
Often yes, for two reasons. NRE and FCNR interest is exempt from Indian tax. Visa dependent employment also shortens the effective horizon on near term money.
Does the emergency fund count inside the FD allocation?
Count it, but track it separately. It has a different job and different access requirements from money being held for a known future expense.
How often should I review the allocation?
On structural life changes rather than on a calendar. A job change, a move, a new dependent or a residency change are the real triggers.
Where this leaves you
There is no correct percentage waiting to be discovered. There is a correct process, and it produces a percentage that belongs to you.
Sort your money by horizon. Sum the near term bucket.
Adjust for income stability, visa exposure and tax status. Then diversify inside the deposit allocation as carefully as you diversify outside it.
Do that once properly and you will not need to ask this question again for several years.
Questions on your own split are best raised in our WhatsApp community. Our team and other investors work through them openly.
Looking at the long horizon end of the portfolio? Our notes on the GIFT City IPO route and the IPO product cover the opposite risk profile.
The GIFT Nifty tracker is there if you follow Indian market direction.
Sources
Reserve Bank of India, press releases. Publishes the annual Basic Statistical Return on deposits with scheduled commercial banks. Covers term deposit share, maturity concentration and household sector contribution.
Reserve Bank of India, official website and publications. For the annual report data on household financial savings and the composition of household financial assets.
Reserve Bank of India, Master Direction on Interest Rate on Deposits. The framework governing deposit tenure, renewal and premature withdrawal.
Deposit Insurance and Credit Guarantee Corporation, guide to deposit insurance. Confirms cover applies per depositor per bank, aggregated across branches, and extends to NRE, NRO and FCNR deposits.
Income Tax Department, official portal. For current slab rates, deduction thresholds and the treatment of deposit interest under the Income-tax Act, 2025.
Deposit rates, tax thresholds and insurance limits change. Verify current figures with your bank and the relevant regulator before acting.
The stories here are illustrative composites drawn from common patterns, not specific individuals.
This article is for information only and is not personal investment advice. Speak to a qualified advisor about your own circumstances.
